Walmart to part ways with Bharti

October 21st, 2013

BENTONVILLE, Ark. – Walmart says it will buy out its partner in a wholesale venture in India, ending the six-year relationship and leaving the world’s largest retailer without a partner in the country.

In agreeing to acquire Bharti Enterprises Pvt.’s stake in the wholesale venture for an undisclosed sum, Walmart gains full control over 20 wholesale stores and their supply chain. These stores supply neighborhood shopkeepers and businesses.

Walmart says it expects to continue to expand the business.

However, severing its ties with Bharti leaves Walmart without the Indian partner it needs to set up supermarkets in India.

Under the country’s laws, foreign firms are required to form partnerships with local businesses to set up supermarkets.

The split with Bharti is the latest in a string of troubles Walmart has encountered in India. The company is under government investigation on possible violations of U.S. anticorruption laws.

"A lot of the players are going to look at this breakup as something that happened because of Walmart’s internal issues," Harish Bijoor, founder of retail consultancy Harish Bijoor Consults Inc., told the Bloomberg news agency.

Analysts note that Bharti’s six-year association with Walmart has given the company extensive retail expertise, which may make it an attractive partner for other foreign retailers.

Despite a potential market of 1.2 billion people, no large foreign chains have formally applied to open supermarkets and other multibrand stores in India since the government changed the law last year to allow them to invest more in the $400 billion sector previously reserved mostly for Indian companies.

The new law allows international companies to open multibrand retail stores with 51% ownership and an Indian minority partner.